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Tuesday, February 22, 2005

Class action should be filed by tap water customers

Source: The Jakarta Post

JJ Amstrong Sembiring, Jakarta

Already angry over a drinking water rate hike in January 2004, tap water customers in Jakarta are now being subject to another 8.14 percent rate increase.

Water consumers are again the objects of arbitrariness on the part of an administration that is supposed to regulate and control the supply of basic commodities and act in the interests of the public.

The planned rate increase is very controversial, at least in connection with the role of foreign private firms in the water business over the last five years and the fact that the quality of service has not been improved. Complaints are frequently lodged against local water company (PAM Jaya), which is owned by the Jakarta administration.

There are several negative aspects to the latest rate hike. First, the rate is inversely proportional to the quality of service, as indicated by a reduction in or even a complete absence of water flow, muddy or brownish water, a chemical odor to the water and worm-contaminated water, as reported by a customer of PAM Jaya.

This negligence is a clear violation of Article 1365 of the Civil Code, which requires compensation to be paid for acts that cause great "loss" to the public.

In some areas of Jakarta, people use tap water from PAM Jaya only for bathing and cleaning. They pay more to purchase mineral water for drinking purposes.

The water billing system is another example of how things are poorly managed. For instance, legal expert Harun Alrasyid filed a police report against PT Thames PAM Jaya (TPJ) because he was fined Rp 5,000 for allegedly paying his water bill late in November 1999. It was later proven that he paid his bill over a week before the due date.

Second, the new rate increase could drive away consumers, which in the medium term would effect technical targets that need to be achieved. The rate increase could also lead to more people using underground water sources, which is eventually detrimental to the environment.

Third, the higher rates fail to take into consideration the purchasing power of the majority of the people in Jakarta.

These three factors lead us to surmise certain requirements that must be fulfilled if water prices are to be raised fairly.

First, the quality of water and service should be improved. Customer complaints must be responded to, because as subscribers customers are required to pay their monthly bills on time and at a fixed rate.

Second, water should be accessible to all subscribers without discrimination. Water is a staple to human life.

Third, rates should be oriented to consumers' purchasing power. If drinking water is expensive, some people may not be able to afford it. In the United States, water rates are determined by the city council, which calculates the purchasing power of subscribers. If, as a result of increased rates, the water company exceeds its targeted profit levels the "surplus" is "returned" to consumers.

In Indonesia, under a variety of excuses, water companies keep raising water prices. This happened in Bandung, Tangerang, Kuningan regency and Palembang.

In Jakarta, rate increases were introduced due to sharp hikes in the costs of production, operation and distribution, following higher rates of inflation from 2001 to 2003. Nevertheless, the decision by a state-owned company, whose "product" directly effects the welfare of the majority of people, to connect rate increases to inflation should be questioned.

The same is true of the argument that rates were raised because Jakarta's water rates are lower than those in Semarang and Banjarmasin.

Water rate assumptions vary from one region to another owing to various factors such as local demand for clean water, the size of the population, the number of subscribers, the quality and quantity of available standard water sources, etc.

One major problem is that the regulatory body for clean water management formed by the Jakarta regional administration -- pursuant to a gubernatorial decision -- which performs the function of policy making and control, is not independent and has no public orientation.

It is thus in no position to claim to act on behalf of water customers.

It therefore can be argued that if water rates remain incompatible with the quality of service provided, customers can file a class action.

In the view of the Jakarta Drinking Water Subscribers Community (KOMPARTA), this action would be in line with Law No. 8/1999 on consumer protection.